Although the IRS is tasked with collecting taxes and enforcing the law, there are also statutes on the books and procedures that can lead to flexibility under certain circumstances. At Moskowitz LLP, we represent taxpayers in working with the IRS to obtain more favorable results for their tax situation.
Before we make an offer in compromise to the IRS, it is in your best interest to try to minimize the amount of money that you owe in the first place. This may make it more likely that the IRS is willing to accept your offer or make you a reasonable counteroffer in negotiations. Since you are liable to pay back taxes, interest and penalties, it makes sense to at least attempt to reduce the penalties prior to submitting an Offer in Compromise.
The team of attorneys, CPAs and enrolled agents at Moskowitz, LLP is ready to help you resolve your issues with the IRS. Call us today at 888-TAX-DEAL (888-829-3325) to learn what we can do for you.
You Can Seek a Penalty Abatement Under Certain Circumstances
While the IRS imposes penalties for things like failure to file and underpaying your taxes, there may be instances in which the agency can reduce or waive them. This is known as a penalty abatement, and it is up to us to make this ask of the IRS. Although the agency may not always be willing to reduce or waive penalties, they may do it under certain circumstances, like:
- This was the first time that the IRS within a certain time period has assessed penalties against you
- There was a reasonable cause for your failure to file or other issue that led to the penalty
- There are statutory exceptions that do not allow for penalties in your case
If the IRS denies your request you can file an appeal of a denial of your request in one of several ways.
It is vital that you both have as complete a tax picture as possible and make it apparent that you are doing everything within your power to resolve your situation. This begins with ensuring that all of your tax returns have been filed, and you have no outstanding disputes with the agency. If you are successful, penalty abatement can result in an overall tax debt that is more manageable and easier for you to pay.
Making an Offer in Compromise to the IRS
Once you know the full extent of the money that you owe to the IRS, there are potential solutions that can help you in your case. The IRS wants for you to pay as much as possible of what you owe, but the agency is willing to be flexible under certain circumstances. The Internal Revenue Code allows for Offers in Compromise, in part, because the IRS knows that it may be better to collect as much as possible from you through an agreement rather than seek to enforce a debt that they may never be able to fully collect.
Most tax professionals recommend that you ask for a penalty abatement before you make an offer in compromise. However, there may be circumstances in which you may make an offer in compromise before you seek a penalty abatement. One reason is that the IRS is threatening imminent enforcement action, such as tax lien or seizure of your accounts. If you are waiting for the IRS to respond to your request for a penalty abatement, they may take action against you in the meantime. If you make an offer in compromise, it could place collections efforts for your account on hold while the situation is being resolved. Further, if there is any doubt about whether you meet the criteria for a penalty abatement, you may consider skipping the request entirely and proceed to negotiate the overall amount you owe with the IRS.
Contact a Tax Attorney
Get control of your tax situation by making a phone call to the experienced tax attorneys and tax resolution professionals at Moskowitz, LLP. We can review your circumstances and help you with a path forward. You can schedule an appointment to speak with one of our tax professionals by filling out an online contact form or by calling us today at 888-TAX-DEAL (888-829-3325).
